Question

Instructions The condensed product-line income statement for Dish N' Dat Company for the month of March is as follows Dish N' Dat Company Product-Line Income Statement For the Month Ended March 31, 2016 Plates Cups Bowls 1 $105,45000 $71,450.00 $31,080.00 2 Sales 1715000 42,66000 32,370.00 Cost of goods sold $13,95000 Gross proft $39,080.00 $62790.00 2759000 16,200.00 sSelling and administrative expenses 42730.00 $20,060.00 $11,490.00 $2,2700 6Income from operations the Cups line were- Fixed costs are 10% of the cost of goods sold and 30% of the selling and administrative expenses. Dish N' Dat assumes that fxed costs would not be malerially affected discontinued Required Deomnenmienntinl.anshmie fnter 91 016.in dnteminn aCmn h.ee (A m .e. A mund /Anm

Answer 1

Correct Answer:

Differential Analysis
Continue Cups (Alternative 1) or Discontinue Cups (Alternative 2)
	Continue Cups	Discontinue Cups	Differential Effect on Income
	(Alternative 1)	(Alternative 2)	(Alternative 2)
Revenues	$ 207,980	$ 176,900	$ 31,080
Costs:
Variable cost of goods sold	$ 82,962	$ 67,527	$ 15,435
Variable selling and admin. expenses	$ 60,564	$ 49,224	$ 11,340
Fixed costs	$ 35,174	$ 35,174	$ 0
Income (Loss)	$ 29,280	$ 24,975	$ 4,305

Should the cups line be retained?

No.

As, indicated by the differential analysis in part (A), the income will Increase by $ 4,305, if the cups line is discontinued.

End of answer.

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